My question is simple and is related to conflicts of interest. In the NASD Mutual Fund Task Force report dated November 11, 2004, Section I Paragraph B, it states the following: advisors may face conflicts of interest due to the potential for using one funds Commissions to pay for soft dollar research that benefits another fund. For example, under Section 28e, a large-cap equity funds Commissions may pay for research that benefits a bond funds investors, despite the fact that the bond fund does not pay Commissions on its portfolio transactions.

This important issue does not appear to have been addressed in the SECs most recent interpretive guidance. In a situation of a commingled stock and bond fund it seems logical to simply disclose the soft dollar practice; but in the situation where there are completely different funds and different beneficial owners, should there be more guidance on what is an appropriate use of soft dollars? Should investors in an equity fund pay the research bill for different clients in a different fund? One hopes that this issue will be addressed by the SEC.